Alternative Investments

Abstract

Hedge funds are often described as an alternative asset. In fact, hedge funds are not an alternative to traditional stock and bond investments in that they replace existing traditional investments but are complementary because they offer unique risk and return opportunities when combined with traditional assets. The author points out some of the problems in perception of hedge funds as an alternative investment including that hedge funds should not be viewed in the same vein as traditional assets; that is, as a benchmark-driven investment.